On Our Radar

On Our Radar

Starbucks to Make Single-Cup Coffee for Green Mountain's Keurig

Green Mountain Coffee (GMCR) has teamed up with Starbucks (SBUX) to manufacture Starbucks and Tazo tea branded K-Cups for use in its Keurig Single-Cup brewing system.

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The move makes Starbucks the exclusive, licensed super-premium coffee brand produced by Green Mountain for the Keurig system.

The K-Cups will be available starting this fall in the U.S. and Canada. The companies hope to expand online and into Starbucks stores early next year.

“Today’s announcement is a win for Starbucks, a win for GMCR and most importantly a win for consumers who want to enjoy Starbucks coffee with the Keurig Single-Cup Brewing system,” said Starbucks CEO Howard Schultz.

Starbucks said that more than 80% of its current U.S. customers do not yet own a single-cup brewer, though both companies said single-cup coffee is the fastest growing market in the industry. Keurig, which allows users to make one cup of coffee or tea at a time, holds more than 80% of the market share.

Starbucks, the world's largest coffee company, has been looking to expand beyond its traditional cafes, entering the single-cup market over the last few years and offering packaged coffee in grocery stores.

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While Starbucks entered the market last year with its Via Ready Brew, the coffeehouse chain said it expects the new partnership to expand its presence in the single-cup industry even further. Analysts have said that sales of Via could hit $1 billion globally by 2015.

Earlier this month, Seattle-based Starbucks terminated an agreement by which it provided coffee discs for Kraft Foods' (KFT) Tassimo one-cup home brewer. Starbucks has been battling with Kraft for months over a grocery distribution agreement.